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A Brief Adam Smith Refresher

Nate Lentz
July 10, 2011

The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations.

According, therefore, as this produce, or what is purchased with it, bears a greater or smaller proportion ti the number of those who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniencies for which it has occasion.

But this proportion must in every nation be regulated by two different circumstances:  first, by the skill, dexterity, and judgment with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed.  Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances.

Adam Smith – opening paragraphs – An Inquiry Into the Nature and Causes of the Wealth of Nations


It should be obvious.   People make businesses.  People drive the wealth of nations – employed people of skill, dexterity, and judgment.  People also make start-ups.  Our great CEOs hire and retain great people.  Our biggest concern is where the talent for growth will come from.  A 9% unemployment rate does not mask the fact that great developers, marketers, and sales people are hard to find – within our borders.

We need to invest in people.  The impact will not be felt tomorrow because, as with any investment, returns compound.   Nevertheless, the investment needs to be made.   Investment drives wealth – of individuals and ultimately of a nation.